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‘This Has No Impact Whatsoever’

Environment Minister Alan Kelly, who is on holiday, spoke to Sharon Ní Bheoláin on RTE’s Six One last night via telephone, following the Eurostat/Irish Water/Exchequer balance sheet brouhaha.

In summary, Eurostat decided, ‘Irish Water is a non-market entity controlled by government and should be classified inside the government sector’ for five main reasons:

1. There has been ‘considerable government control’ over the body, and especially in regards to board appointments and ‘pricing parameters’.
2. Irish Water ‘merely re-organises previously non-market activity carried out by local government, with local government assets being transferred to Irish Water and a large majority of Irish Water staff remaining local government employees’.
3. There has been ‘significant and continuous government funding and support to Irish Water’.
4. A ‘lack of economically significant prices, concerning in particular the capping of fees for households’.
5. The so-called ‘50% test’ – where sales cover at least 50 per cent of the production costs over a sustained multi-year period – has not been met.

Further to this, Mr Kelly said Eurostat’s decision would make no impact at all.

Sharon Ní Bheoláin: “It’s evident that the Government has been putting a brave face on this all day long. They’re saying ‘nothing to be seen here’ but, to the man and woman watching at home, this is really the latest chapter in the omnishambles that has been Irish Water.”

Alan Kelly: “I wouldn’t agree with that at all Sharon. Straight up, this has no immediate impact because in the Spring Economic Statement, we provided for it to be on balance sheet. It doesn’t change anything, it doesn’t change our plans for investment, it doesn’t change the structure of Irish Water and, for that man and woman you speak about, it doesn’t change the charges system that’s in place.”

Ní Bheoláin: “No change from a budgetary point of view, minister. But a sea change from the Government’s position. It wasn’t so long ago that we heard the Tánaiste say that she was confident that the Government would pass this Eurostat test, only today, [Finance Minister] Michael Noonan saying, it was embarrassing. Now do you agree with Michael Noonan?”

Kelly: “I don’t agree with that statement. I haven’t even heard him say it to be honest, but I don’t agree with that statement. The simple fact of the matter is that there’s a number of issues which have been raised by Eurostat. The CSO will actually, I believe, be challenging some of the comments and some of the statements by Eurostat and, by the earliest opportunity, we will be looking to see this reviewed and I believe that, into the future, in 12 months time or so, this should be reviewed and looked at again and I believe it will be cause essentially I believe, in the future, it will be off balance sheet but in the short term…”

Ní Bheoláin: “Can I just…because the Eurostat…minister…”

Kelly: “This has no impact whatsoever.”

Ní Bheoláin: “The Eurostat statement is here and it’s quite stark. It talks about the lack of economically significant prices. It refers to the capping of fees, it’s quite clear that they are of the view that you priced water too cheaply.”

Kelly: “I’ve read their statement and I’ve read their statement in detail, I disagree fundamentally of course with some of the analysis and it’ll be up to us and working through the CSO to challenge that, into the future. They have said that, from a forward-looking point of view, they would look at this again and we’re going to ensure that that happens because, into the future, I believe they should be off-balance sheet but let me just repeat here: this doesn’t change anything. In the Spring Economic Statement, we provided for this. We were prudent as a Government and we provided for this in all our figures, in all our budgetary analysis, all the way out, that this would be on balance sheet…”

Ní Bheoláin: “I want to ask you minister, just before, because time is against us, what will you be bringing to the table when you do go back to Eurostat and ask them to reevaluate their position.”

Kelly: “Well essentially, I think there were a number of points which the Central Statistics Office which is an independent body, they have issues with a number of the comments that have been made by Eurostat and the analysis. Essentially, some of their comments in relation to structure, in relation to the funding model, and also in relation to the role of local authorities, I think they’re all issues that need to be re-looked at. But, ultimately, once Irish Water is bedded down in this country – and I don’t think there is another alternative – in fact I know there isn’t another alternative. Once this is bedded down, I believe this will be off balance sheet. But In the short-term, this decision doesn’t have any impact from a budgetary point of view whatsoever.”

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41 thoughts on “‘This Has No Impact Whatsoever’”

They paid for the metres with our pensions and then reinvented the census.
Granted, they tried to set-up a company with 4million customers in less than two years, but we were compelled to install the metres by 2015 as per the Water Directive.
And now we won’t metre for people washing their cars and driveways and watering their gardens but continue to pay for two administrations and capital investment for infrastructure.
I’m feeling very bedded down, thank you.

no he doesnt’.
The water regulator expressed serious concerns regarding the 12 year sla woth local authorities, the government ignored this
irish water wanted to impose a standing charge, the government over ruled this.
kelly is happy with 45% compliance, yet he know eurostat needed 50%.

Basically, all irish water has achieved is to add very expensive layer after layer of management above the old local authority structures, a classic quango.

Kelly is incompetent and doesn’t posess the skills to run a tap, never mine a government ministry.
John Tierney has a career littered with failures and totally lacking in successes, why would iw be any different?

What the govt have delivered is a tax collecting department, nothing more, nothing less.
If you need any further proof of incompetence, have a listen to Paudie Coffey on RTE this mornng, the man is a liar, a fraud and a total embarassment.

The CSO can look at all the figures they want, Eurostat will just tell them to toddle on and go back to playing with monopoly money like good lads and lasses. As for “This has no impact whatsoever.” that pretty much sums up this governments approach to running this country, no idea what they are at and bury the head in the sand when it all gets to much.

and this joker wants to become leader of The Labour Party! Get rid of him now before he does any more damage. Irish Water was a shambles from day 1. The most hated Quango that ever existed. Thats what cronyism get you ….. useless ‘shower’ of ‘drips’!

He’s reminding me more and more of The Black Knight from Monty Python’s Holy Grail.

Hey Alan, your pants are on fire
No, I wouldn’t agree with that statement.but your pants have massive flames coming from them
No they don’t. I’m very happy with my pants.There’s a very strong smell of burning flesh
Look, my pants are exactly how I expected them to be at this point & I’m very happy.Quick, somebody get a fire blanket
You can just shut up or get out to be frank.

My understanding is, a company can be “Publicly owned”, but not end up in the “Government Sector” : The list of objections from Eurostat can be split into those which show IW is “Publicly Owned” and those which show “given there is Public ownership, IW belongs to the government sector”.

Putting IW in the constitution would be (in my view) a surefire way to ensure it always remains Publicly owned, as if anything it would copper fasten government protections. But provided it passes the market test, i.e. sets “economically significant” prices it, can go off the government balance sheet.

The test itself is not set in stone, Eurostat regularly (although not with great frequency) updates its rules, the last time they did this was in 2010, although the rules only came into force in the last quarter of last year (the update before that was in 1995, the next update is scheduled for 2025).

The idea of updating the rules is to add clarity for example, in moving from the 1995 version of the rules to the 2010 version, the “Other Financial intermediary ” sector of the economy was further broken into sub-sectors as this sector had grown very large and there wasn’t anyway of making it less opaque for national accountancy purposes. Another reason is when creative accounting eventually subverts the spirit of the rule, an example here would be the growth of “Brass Plate” headquarters, which are located for example in Ireland or Malta or somewhere for tax or other regulatory purposes, but all of their actual economic activity takes place in another country, even perhaps the decision making is made in another country. Under the 1995 version of the rules it was quite hard to know in which to record the value added (i.e. the contribution to GDP) of this company.
A third reason to update the rules is because in their current form certain entities always switch between sectors depending on how profitable they are or a change of ownership structure etc. Eurostat would like accurate and stable figures and would consider rule changes which would lead to less erratic revision prone data.

If Eurostat thought Ireland (and other countries) were playing too much with the market/non-market test or if they saw that corporations like IW sometimes pass and sometimes fail it they might change the rule.

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